Foolish Academics Prescribe Wrong Antidote for Developing Country Diseases: Fewer Patents & More Compulsory Licenses Will Cause More Harm Than Good

Fewer Patents, More Compulsory Licenses: The Knock-Off Effects of India's Strict Patent Act and Thailand's Compulsory Licenses

By Professor Brook K. Baker

Health GAP

December 11, 2007

Activists have long claimed that access to medicines campaigns set precedents that have a snowball effect. What we are now seeing, given India's victory against Novartis in the drug company's challenge to section 3d of the India Patent Act and given Thailand's highly publicized campaign to issue compulsory licenses on both AIDS and heart disease medicines, is a new wave of patent withdrawals and a growing wave of compulsory licenses.

[CORRECTION, PROF. BAKER: WHAT WE ARE NOW SEEING IS A LYNCH-MOB APPROACH TO PUBLIC ADVOCACY BASED ON FEARS AND MISREPRESENTATIONS RATHER THAN FACTS. ACTIVISTS WILL CAUSE MUCH GREATER HARM THAN GOOD TO DEVELOPING COUNTRY EFFORTS TO IMPROVE PUBLIC HEALTHCARE]***

This reciprocal wave action creates a wider opening for continuing access to newer and lower costs medicines. But the promise of this opening will only be realized if more countries amend their patent acts to take advantage of the TRIPS-compliant, definitional flexibilities that India has enacted and if more countries use the TRIPS-compliant flexibilities for issuing compulsory licenses for generic medicines that Thailand has used.

[ACTUALLY, MORE AND MORE PHARMACEUTICAL AND BIOTECH COMPANIES WILL WITHDRAW PATENT APPLICATIONS IN SUCH DEVELOPING/EMERGING COUNTRIES BECAUSE OF THEIR CONCERN THAT THEIR MEDICAL INNOVATIONS WILL BE EXPROPRIATED BY GOVERNMENTS WITHOUT PAYMENT OF FAIR & ADEQUATE COMPENSATION - HENCE, THEY WILL NO LONGER MAKE AVAILABLE THE MUCH NEEDED MEDICINES DEVELOPED AND COMMERCIALIZED OUTSIDE SUCH COUNTRIES BASED ON RECOGNIZED AND LEGALLY PROTECTED PATENTS. IDEOLOGUES LIKE PROF. BAKER, NEVERTHELESS CONTINUE TO INSIST THAT PRIVATE IP SHOULD BE CONVERTED INTO PUBLIC PROPERTY.] ****

Patent victories

In the summer of 2006, following massive August 7 protests in Bangalore and Bangkok, GlaxoSmithKline withdrew its patent application for lamivudine/zidovudine (Combivir or Combid), an important first-line combination antiretroviral, both in India and, perhaps even more significantly, in Thailand. The withdrawal in India was clearly obligatory under India's new Patent Act 2005, which has strict standards preventing patenting of mere combinations of existing medicines, and was relatively straightforward, even under Thailand's easier, more "Westernized" patenting standards. Combivir was a simple fixed-dose combination of two earlier discovered drugs and involved neither newness nor an inventive step. The principal new "ingredient" in the combination was silicone - a trivial addition graphically represented by Indian demonstrators when they dumped sand in front of the Glaxo office. The anti-Combid victory in Thailand was reminiscent of an earlier activist victory in 2004 where a robust civil society movement forced Bristol Myers Squibb to abandon its patent on ddi. Although Glaxo saw the writing on the wall, Novartis did not and tried to mount a TRIPS and constitutional challenge to section 3d of the Indian Act.

Once again protestors mounted an international campaign, and good lawyering by the Lawyers Collective and others resulted in a resounding defeat for Novartis in the Chennai High Court, in August, when all of Novartis's efforts to undermine India's strict standards for patentability were defeated.

At the time, activists claimed that the Novartis case had critical implications for access to medicines, certainly for AIDS drugs, but for other medicines as well. There were thousands of patent applications waiting in the India 1995-2005 patent "mailbox," the vast majority of which involved minor tweaks on pre-1995 medicines. If Novartis had won, many of those patent applications would have been pursued and many might have succeeded. However, with Novartis's defeat, the pharmaceutical industry began to strategically review its mailbox filings, and its new filings as well, to weed out the clearly unmeritorious applications.

The most recent example is further withdrawals by GlaxoSmithKline of two ARV patent applications, on Abacavir and Trizivir (GSK drops claims on two AIDS medicines, The Economic Times, 7 Dec 2007). Sources report that Glaxo's decision to withdraw those applications was in response to Novartis's loss and was undertaken to avoid a patent-defeat precedent that might have undermined its attempts to pursue patent claims in countries with weaker patent standards.

The growing evidence of India's success in stopping the flow of patent applications on trivial variations of existing products should lend courage to activists and patent reformers in other countries. India has clearly set a new and defensible standard for patenting only truly innovative pharmaceutical products. The Philippines parliament is already considering a statutory amendment in line with section 3d of the Indian Act, but the momentum should not stop there. Other countries can lighten the load on their under-resourced patent offices and ensure high standards of patentability for medicines by taking the route forged by India.

The Indian success has also been reinforced by the availability of pre-grant opposition procedures, which allow consumer groups, generic companies, and IP specialists to intervene and challenge weak patent applications. There are already fifteen pre-grant oppositions in India concerning AIDS medicines and the number is likely to grow as public interest groups begin to appreciate the importance of stopping 90-95% of the patent applications on pharmaceutical patents that can be rejected under the Indian standard even though they sail through the U.S. patent office.

[UTOPIAN ACADEMICS SUCH AS PROF. BAKER CONVENIENTLY OMITS THE INTENTION OF ACTIVISTS, NAMELY, TO ESTABLISH MEDICINES AND MEDICAL TECHNOLOGIES AS 'PUBLIC GOODS' THAT MAY BE EXPROPRIATED BY GOVERNMENTS]***

Compulsory licensing victories

Activists in Thailand have waged a near decade-long campaign to convince the Thai government to issue compulsory licenses on AIDS medicines.

Although the first effort in 1999 concerning ddi was unsuccessful because of fears of U.S. trade retaliation, activists persisted and new leadership in the Thai Health Department issued compulsory licenses on efavirenz, lopinavir/ritonavir, and clopidrogel in late 2006 and early 2007. Of course, Thailand was not the first developing country to issue compulsory licenses on AIDS medicines. Malaysia and Indonesia had done so earlier for first-line regimens, and over half a dozen countries had done so in Africa as well. However, in terms of middle-income countries with large populations living with HIV/AIDS, Thailand was the first to issue licenses on higher-cost, second-line medicines. Brazil had threatened such licenses, but in the end had improvidently settled for price concessions instead.

The impact of Thailand's leadership is immediately apparent. Shortly after Thailand's bold move, Brazil issued a compulsory license on efavirenz on May 4. Indonesia did so even earlier, in March of 2007, though, unlike Brazil, its license drew little attention from Big Pharma, the USTR, or the army of right-wing think tanks that have mounted a global disinformation campaign about the legality and propriety of compulsory licenses.

Emboldened by Thailand, Indonesia is considering additional licenses on tenofovir, videx, and lopinavir/ritonavir. The proactive Ministry of Health in Thailand is also continuing to weigh additional government use C.L.s on four cancer medicines and up to 20 additional products for treating hypertension, diabetes, and hyperlipideamia. Lawyers in South Africa have petitioned the Competition Commission to obtain additional licenses on efavirenz, both to promote competition but also to allow co-formulation of fixed-dose combinations.

Most of the licenses thus far have been issued for government use. This form of licensing has certain advantages because it is widely practiced in rich countries, including the U.S., because it obviates the need for prior negotiations with the drug company, and because it reserves the private sector to the patent holder's monopoly control, undermining claims that all profits are foregone and that research and development will be undermined.

However, there are also some drawbacks to government use licenses, especially when one considers how much pressure has been brought to bear on Thailand even though it carved out a private-sector monopoly reserve for Big Pharma. The first drawback, not so apparent in Thailand as perhaps in other countries, is that many poor people cannot access medicines in public sector pharmacies, which often experience stock-outs or otherwise fail to carry essential medicines. These patients must therefore rely on private sector pharmacies where monopoly pricing prevails. Thus, in countries where high disease burdens persist and where major portions of the population are de facto dependent on private-sector pharmacies, government use licenses may be an imperfect solution to access on the ground. The second drawback is that having two pricing regimes in the same country, high private-sector prices and low public-sector prices, encourages "arbitrage," or more accurately theft and resale of public sector medicines to private sector consumers. Third, avoiding negotiations may be overrated since governments can set short time limits for such negotiations and insist on strict pro-access terms whether by regulation or negotiation demands.

The impact of Thailand's compulsory licensing victories will be lessened if other developing countries do not follow suit. In fact, a better scenario will arise when developing countries cooperate more vigorously in the selection and timing of compulsory licenses. Generic producers are most likely to invest the $1-$1.5 million dollars needed to formulate a generic equivalent if they can see a sizeable market in developing countries that aggregate their collective demand. In addition, with larger, more secure, and more predictable markets, more producers will enter the market and more producers will manufacture at efficient economies of scale. The combination of competition and efficiency will result in lower prices and more secure and redundant sources of supply.

The strongest way for countries to cooperate may well be through creation of patent pools that allow the collective management of both compulsory and voluntary licenses (negotiations on both in- and out-licenses).

Alternatively, developing countries could form regional "buying groups" and/or work intensively with the Clinton Foundation (at least for ARVs).

However, in order to be able to take advantage of their South-South strength, countries will need to be more proactive both in amending their patent legislation to allow maximum use of TRIPS-compliant flexibilities and in utilizing those flexibilities to actually issue compulsory licenses.

The current, countervailing strategy of Big Pharma, besides USTR intimidation and even product withdrawals, seems to be the use of strategic price discounts and restrictive licensing. Although these concessions look tempting in the short-run - since they reduce the treat of trade sanction and product embargoes - they are futile in the long run since they are Pharma controlled and because they deter generic entry. An even greater danger is presented by so-called free trade agreements where the United States attempts to impose TRIPS-plus intellectual property protections that hamper countries ability to ensure access to medicines for all.

Conclusion

The space that has been created by activist-backed defense of India's strict patent standards and by activist-prompted issuance of multiple compulsory licenses in Thailand is one of the most promising outcomes of AIDS advocacy in 2007. Hard fought precedents have been won, but enemies in Big Pharma and in the U.S. government are hard at work plotting a reversal of fortune. It is only by building on these recent victories - by rejecting more patents, by issuing more compulsory licenses, and by opposing TRIPS-plus IPR provisions - that activists and pro-access forces in developing countries can create a momentum that cannot be stopped.

Standing still is not an option.

Professor Brook K. Baker, Health GAP
Northeastern U. School of Law
Program on Human Rights and the Global Economy